Date: 20020820
Docket: 2002-240-IT-I
BETWEEN:
GRAHAM HUNT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Beaubier, J.T.C.C.
[1] This appeal pursuant to the Informal Procedure was heard at Nanaimo, British Columbia, on July 26, 2002. The Appellant was the only witness.
[2] Paragraphs 5 to 11 inclusive of the Reply to the Notice of Appeal read:
5. By Notices of Reassessment, dated March 19, 2001, for the 1998 and 1999 taxation years, the Minister disallowed moving expenses claimed by the Appellant, in the amounts of $7,310 and $10,284 respectively.
6. The Appellant revised his claims for moving expenses in the 1998 and 1999 taxation years to $7,310 and $12,447 respectively, as shown on Exhibit "A".
7. At all material times the Appellant's residence was located at 6266 Chippewa Road, Duncan, British Columbia.
8. In so reassessing the Appellant's income tax return for the 1998 and 1999 taxation years on March 19, 2001, the Minister made the following assumptions of fact:
(a) the Appellant and his late spouse, Patricia Hunt, (the "Spouse"), spent the three-year period from July 1995 to approximately July 1998 living on their sailboat, while they travelled from Vancouver Island to the United States, Mexico, Guatemala, Costa Rica, Panama, Isla San Andres, Honduras, Belize, Mexico and the Bahamas;
(b) while travelling the Appellant's mailing address was in Canada;
(c) while travelling the Appellant had no bank accounts in countries other than Canada;
(d) at all material times the Appellant was a factual resident of Canada;
(e) the Appellant incurred expenses of $19,758, for transporting the sailboat, including household effects, overland from Miami to Seattle and for hotels, meals, car rental, and airfares, as detailed on the attached "Exhibit "A";
(f) the Appellant did not return to a new work location in Canada; and
(g) the Appellant and the Spouse continued to live on the sailboat after their return to Canada and in or about May 1999 they moved back into their residence, referred to in paragraph 7 herein.
B. ISSUES TO BE DECIDED
9. The issue is whether the Appellant, in computing his income for the 1998 and 1999 taxation years, should be allowed deductions for moving expenses, in the amounts of $7,310 and $12,447, in the 1998 and 1999 taxation years.
C. STATUTORY PROVISIONS, GROUNDS RELIED ON AND RELIEF SOUGHT
10. He relies on sections 62 and 64.1 and subsection 248(1) of the Act.
11. He submits that throughout the period from 1995 to 1998 the Appellant was ordinarily a resident of Canada and that the location of his residence remained at 6266 Chippewa Road, Duncan, British Columbia.
[3] None of the assumptions were refuted by the evidence.
[4] This appeal centres on section 62 of the Income Tax Act (the "Act") and the definition of "eligible relocation" in subsection 248(1) of the Act. They read:
62. (1) There may be deducted in computing a taxpayer's income for a taxation year amounts paid by the taxpayer as or on account of moving expenses incurred in respect of an eligible relocation, to the extent that
(a) they were not paid on the taxpayer's behalf in respect of, in the course of or because of, the taxpayer's office or employment;
(b) they were not deductible because of this section in computing the taxpayer's income for the preceding taxation year;
(c) the total of those amounts does not exceed
(i) in any case described in subparagraph (a)(i) of the definition "eligible relocation" in subsection 248(1), the taxpayer's income for the year from the taxpayer's employment at a new work location or from carrying on the business at the new work location, as the case may be, and
(ii) in any case described in subparagraph (a)(ii) of the definition "eligible relocation" in subsection 248(1), the total of amounts included in computing the taxpayer's income for the year because of paragraphs 56(1)(n) and (o); and
(d) all reimbursements and allowances received by the taxpayer in respect of those expenses are included in computing the taxpayer's income.
Section 248(1) ...
"eligible relocation" means a relocation of a taxpayer where
(a) the relocation occurs to enable the taxpayer
(i) to carry on a business or to be employed at a location in Canada (in section 62 and this subsection referred to as "the new work location"), or
(ii) to be a student in full-time attendance enrolled in a program at a post-secondary level at a location of a university, college or other educational institution (in section 62 and in this subsection referred to as "the new work location"),
(b) both the residence at which the taxpayer ordinarily resided before the relocation (in section 62 and this subsection referred to as "the old residence") and the residence at which the taxpayer ordinarily resided after the relocation (in section 62 and this subsection referred to as "the new residence") are in Canada, and
(c) the distance between the old residence and the new work location is not less than 40 kilometres greater than the distance between the new residence and the new work location
except that, in applying subsections 6(19) to (23) and section 62 in respect of a relocation of a taxpayer who is absent from but resident in Canada, this definition shall be read without reference to the words "in Canada" in subparagraph (a)(i), and without reference to paragraph (b);
[5] Mr. Hunt's home in Duncan, British Columbia was rented to other people while he and his wife were on their sailboat. The evidence is that they were on the sailboat at all the times in question. But Mr. Hunt stated that their "factual" residence was in Canada. Whether this was for tax purposes, health insurance purposes, or other reasons, was not explained. The Appellant's sailboat, the "Nancy Blackett" was registered in Canada as Number 347795 (Exhibit R-2). It appears from Exhibit R-2 that it sailed out of the Maple Bay Yacht Club from which the Appellant left and to which he returned.
[6] The Appellant advised others that his mailing address while he sailed was Box 297, Mill Bay, British Columbia, V0R 2P0 and that his safety deposit box was at the Canadian Imperial Bank of Commerce, Duncan, British Columbia; his bank account also appears to have been there.
[7] On the evidence, the Appellant was sojourning on his sailboat while he was travelling. At all material times he intended to return to Canada and work. He did not describe himself as "vacationing" in Exhibit R-2, the "Determination of Residency Status" form NR73, E(00) when he embarked on his trip. Rather he called it "Travel". However there is no evidence that he worked elsewhere and in fact the trip was an extended vacation.
[8] There is no assumption that the Appellant's rented home in Duncan remained his residence. There is only assumption 8(d) that "at all material times the Appellant was a factual resident of Canada".
[9] He returned to a job at the Maple Bay Yacht Brokerage. Mr. Hunt had retained his membership throughout at the Maple Bay Yacht Club and the Court assumes from the evidence, that his sailboat was normally berthed at the "Maple Bay Marina" before, during and after the trip (See Exhibit A-1). He lived on his sailboat at the Maple Bay Marina upon his return to Canada until he moved back into his house in Duncan after his tenants vacated.
[10] In these circumstances, it is appropriate to quote part of the judgment of Kerwin, J. of the Supreme Court of Canada in Thomson v. Canada, [1946] S.C.R. 209, which reads:
KERWIN J.:- The sole point for determination in this appeal is whether, during the year 1940, the appellant was "residing or ordinarily resident in Canada" within the meaning of section 9(1)(a) of the Income War Tax Act as it stood in 1940, or whether he was merely sojourning there within the meaning of section 9(1)(b). No question is raised to the amount of the assessment. The relevant parts of section 9 are as follows:--
9. There shall be assessed, levied and paid upon the income during the preceding year of every person.
(a) residing or ordinarily resident in Canada during such year; or
(b) who sojourns in Canada for a period or periods amounting to one hundred and eighty-three days during such year;
There is no definition in the Act of "resident" or "ordinarily resident" but they should receive the meaning ascribed to them by common usage. When one is considering a Revenue Act, it is true to state, I think, as it is put in the Standard Dictionary, that the words "reside" and "residence" are somewhat stately and not to be used indiscriminately for "live", "house" or "home". The Shorter Oxford English Dictionary gives the meaning of "reside" as being "To dwell permanently or for a considerable time, to have one's settled or usual abode, to live, in or at a particular place". By the same authority "ordinarily" means "1. In conformity with rule; as a matter of regular occurrence. 2. In most cases, usually, commonly. 3. To the usual extent. 4. As is normal or usual". On the other hand, the meaning of the word "sojourn" is given as "to make a temporary stay in a place; to remain or reside for a time".
The House of Lords has adopted the everyday meaning as a test in applying the terms "resident" and "ordinarily resident" in the British Income Tax Act. Levene v. Commissioners of Inland Revenue [[1928] A.C. 217.]; Commissioners of Inland Revenue v. Lysaght [[1928] A.C. 234.]. Under the British Act that is of particular importance where a finding of the Commissioners on a question of pure fact cannot be reviewed by the Courts except on the ground that there was no evidence on which they could have arrived at their conclusion. Under our Act no such question arises, but the remarks of the peers who took part in the two judgments mentioned are of assistance. Rule 3 of the General Rules applicable to all the Schedules of that Income Tax Act may have had an effect in the result arrived at in some of the cases. In the Levene case [[1928] A.C. 217.], Viscount Cave, at page 224, points out that if a man sought to be taxed is a British subject regard must be had to that rule
which provides that every British subject whose ordinary residence has been in the United Kingdom shall be assessed and charged to tax notwithstanding that at the time the assessment or charge is made he may have left the United Kingdom, if he has so left the United Kingdom for the purpose only of occasional residence abroad;
and as a matter of fact, at the foot of the same page the Lord Chancellor, after agreeing that it was plainly open to the Commissioners to find that Mr. Levene was resident in the United Kingdom, stated that it was probable that Rule 3 applied to him. Viscount Sumner refers, at p. 227, to the soundness of the Commissioners' conclusion on Rule 3.
On the other hand, the decision of the First Division of the Court of Exchequer (Scotland) in Cooper v. Cadwaladar [(1904) 5 Tax Cas. 101.], was referred to with apparent approval by Viscount Cave at page 223 of the Levene case [[1928] A.C. 217.] and by Viscount Sumner at page 224 of the Lysaght case [[1928] A.C. 234.]. There, the person held liable to tax was a citizen of the United States, where he resided and practised his profession, but rented a house and shooting rights in Scotland where he spent about two months in each year. I refer to this decision because I find it difficult to imagine that it would be held in Canada that a citizen of the United States, residing in that country, but owning a summer home in Canada which he occupied for four or five months in each year, was, by reason of the latter facts, a resident of this country within the meaning of our Act.
However, that is not the case before us. No quarrel is found with the statement of facts contained in the reasons for judgment of the President of the Exchequer Court and I do not, therefore, repeat all of them. The appellant was born in Saint John, New Brunswick, and is still a citizen of Canada. Notwithstanding the absence of a provision corresponding to Rule 3 of the General Rules referred to above, that is a fact to be considered. I agree with the President that the appellant's motions in going to Bermuda, making an affidavit as to his intention, renting a house which he never used, and obtaining a passport, were a pure farce; that the appellant never became a resident of Bermuda; but that, whether that be so or not, he was certainly not a resident of Bermuda in the year 1940. The appellant had not been there since 1933 and his entry to Canada as a tourist from Bermuda was fictitious. The residence he built at Pinehurst in North Carolina, presumably with his other activities in the United States, convinced the tax authorities of that country that he was a resident there for the purposes of its Income Tax Act. Assuming that to be a fact, a man may be a resident of more than one country for revenue purposes. The frequency with which he comes to Canada and what the President described as the routine of his life are important matters in coming to a conclusion, and I agree with that arrived at by the President.
The appellant seeks to make himself a sojourner as he carefully remained in Canada for a period or periods amounting to less than 183 days during each year. This attempt fails. The family ties of his wife, if not of himself, the erection of a substantial house, the retention of the servants, together with all the surrounding circumstances, make it clear to me that his occupancy of the house and his activities in Canada comprised more than a mere temporary stay therein. ...
[11] The Appellant, as he stated, factually resided in Canada, and he was sojourning on the "Nancy Blackett". This accords with his statement that he intended to "travel", with the "Nancy Blackett's" journeys into various countries in the Caribbean, and with his own allegation of a factual residence in Canada. The evidence does not refute assumption 8 (f) that the Appellant did not return to a new work location in Canada which qualifies under subsection 62(1).
[12] As a consequence, the Appellant did not ever relocate and so the "Nancy Blackett" was never transported as part of an "eligible relocation".
[13] For these reasons, the Appellant has failed to provide evidence to refute the assumptions contained in the Reply. The appeals are dismissed.
Signed at Saskatoon, Saskatchewan, this 20th day of August, 2002.
|
"D. W. Beaubier" |
J.T.C.C.
COURT FILE NO.: 2002-240(IT)I
STYLE OF CAUSE: Graham Hunt v. Her Majesty the Queen
PLACE OF HEARING: Nanaimo, British Columbia
DATE OF HEARING: July 26, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge D. W. Beaubier
DATE OF JUDGMENT: August 20, 2002
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Victor Caux
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-240(IT)I
BETWEEN:
GRAHAM HUNT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on July 26, 2002 at Nanaimo, British Columbia, by
the Honourable Judge D. W. Beaubier
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Victor Caux
JUDGMENT
The appeals from the reassessments made under the Income Tax Act for the 1998 and 1999 taxation years are dismissed in accordance with the attached Reasons for Judgment.
Signed at Saskatoon, Saskatchewan, this 20th day of August, 2002.
|
"D. W. Beaubier" |
J.T.C.C.